Alabama Education Trust Fund revenue on track to meet expenses

MONTGOMERY -- The state Education Trust Fund should collect enough state income taxes and other levies to meet its spending target for this fiscal year and avoid across-the-board cuts, Assistant state Finance Director Bill Newton said Wednesday.

He also predicted the state General Fund, a major source of state money for Medicaid, prisons and other non-education areas of government, should collect enough revenues to meet its trimmed spending target for the year without further cuts.

"Our estimates continue to be that both budgets will end balanced at the end of the fiscal year on Sept. 30," Newton said.

The Education Trust Fund collected $4.51 billion in October through July, the first 10 months of the state's fiscal year, an increase of $250.7 million, 5.9 percent, from the same period a year earlier, the state Finance Department reported Wednesday.

Tax collections for the trust fund, the main source of state tax dollars for public schools and colleges, need to grow by roughly 5.6 percent for the entire year to reach its budgeted spending total of $5.63 billion for fiscal 2012.

But lawmakers also approved taking an additional $40 million from the trust fund in this fiscal year, putting it in a reserve and spending it in fiscal 2013, which starts Oct. 1.

The trust fund's tax collections need to grow by roughly 6.3 percent in this fiscal year to both meet this year's spending target and raise the $40 million meant to be spent next year.

Newton predicted both goals would be reached.

"We're showing continued growth in the state's economy," Newton said. "We're at the 10-month period of the fiscal year and there's solid growth in the major tax sources for the Education Trust Fund."

The trust fund gets most of its money from state income tax and sales tax collections, which tend to rise and fall with the economy.

State Sen. Trip Pittman, R-Montrose, also predicted the trust fund would collect enough money to meet this year's budgeted spending. But Pittman, who owns a tractor dealership in Daphne, said he sees a softening of the economy that has increased his doubts about collecting the extra $40 million.

"I think things have cooled off a little bit in the economy from where they were a couple months ago," said Pittman, who chairs the Senate committee that oversees the state education budget.

The General Fund now is budgeted to spend $1.73 billion in this fiscal year. It had been budgeted to spend about $188 million more, but Gov. Robert Bentley in March imposed 10.6 percent proration because of lower-than-expected revenues and jumps in open-ended appropriations.

"We've made the budget cuts earlier in the year to balance the budget, and we're on a path to end with the General Fund budget being balanced," Newton said.

The General Fund collected $1.35 billion in taxes and other revenues in October through July, an increase of $210.4 million, 18.5 percent, from the same period a year earlier, the Finance Department reported.

The General Fund in this fiscal year got a $266.4 million windfall from the Alabama Trust Fund, which gets most of the natural gas royalties paid the state by companies that pump natural gas offshore.